...we are focused on improving our results with the recently implemented marketing and advertising initiatives, which should drive more customer traffic, and the implementation of new initiatives to improve our store operations.
Mark E. Speese, the Company's Chairman and Chief Executive Officer

Rent-A-Center (RCII) today announced revenues and net earnings for the quarter and year ended December 31, 2004.

Rent-A-Center reported total revenues for the quarter ended December 31, 2004 of $585.3 million, when excluding the one-time other income item discussed below, a $26.6 million increase from $558.7 million for the same period in the prior year. This increase of 4.8% in revenues was primarily driven by incremental revenues generated in new and acquired stores, offset by a decrease in same store sales of 3.7%. Net earnings for the quarter ended December 31, 2004 were $41.7 million, when excluding the one-time other income item discussed below, or $0.55 per diluted share, representing a decrease of 11.3% from the $0.62 per diluted share, or net earnings of $51.5 million for the same period in the prior year. The decrease in earnings per diluted share is attributable to a decrease in same store sales and an increase in operating expenses related to new store openings and acquisitions offset by a reduction in the number of Rent-A-Center's outstanding shares.

Total revenues for the twelve months ended December 31, 2004 increased to $2.313 billion, when excluding the one-time other income item discussed below, a 3.8% increase from $2.228 billion for the same period in the prior year. Same store revenues for the twelve month period ending December 31, 2004 decreased 3.6%. Net earnings for the twelve months ended December 31, 2004 were $182.7 million, or $2.28 per diluted share, when excluding the one-time other income item and litigation and finance charges discussed below, a decrease of 2.1% over the diluted earnings per share of $2.33, or net earnings of $203.2 million for the prior year, when excluding the finance charges discussed below.

"We are pleased with the results for the fourth quarter, where we saw increases in revenues, customers and agreements on rent, and met our expectations for diluted earnings per share," commented Mark E. Speese, Rent-A-Center's Chairman and Chief Executive Officer. "In addition, we continue to generate significant cash flow from operations which we are utilizing to enhance stockholder value by, among other things, adding 5% to 10% annually to our store base and repurchasing our outstanding common shares," Speese added.

Through the twelve month period ended December 31, 2004, Rent-A-Center generated cash flow from operations of approximately $331.0 million, while ending the quarter with $58.8 million of cash on hand. On September 28, 2004, the Company announced that its Board of Directors increased the authorization for stock repurchases under the Company's common stock repurchase program to $300 million. Through the twelve month period ended December 31, 2004, the Company repurchased 7,689,700 shares for $210.5 million in cash under the program and has utilized a total of $237.6 million of the total amount authorized by its Board of Directors since the inception of the plan.

During the fourth quarter of 2004, Rent-A-Center opened 25 new store locations, acquired 4 stores as well as accounts from 17 additional locations while consolidating 12 stores into existing locations and selling 2 stores. Through the twelve month period ending December 31, 2004, the Company opened 94 new stores, acquired a total of 191 others as well as accounts from 111 additional locations while consolidating 49 stores into existing locations and selling 9 stores. This net addition of 227 new locations equated to an increase of approximately 8.6% to the store base. To date through the first quarter of 2005, the Company has opened 5 new store locations, acquired 2 stores and accounts from 6 additional locations, while consolidating 8 stores into existing locations and selling 3 stores.

"Our 2004 earnings were negatively affected by the weakness in our same store sales, which we believe reflects, among other things, higher fuel and energy costs that ultimately suppressed customer demand," stated Mr. Speese. Mr. Speese added, "However, we are focused on improving our results with the recently implemented marketing and advertising initiatives, which should drive more customer traffic, and the implementation of new initiatives to improve our store operations. We believe these initiatives will ultimately make a positive impact on our customer's experience, resulting in the improvement of same store sales and growth in profitability."

During the fourth quarter of 2004, Rent-A-Center recorded $7.9 million in one-time other income associated with the sale of charged-off accounts. This other income increased diluted earnings per share in the fourth quarter of 2004 by $0.06, from $0.55 per diluted earnings per share to the reported diluted earnings per share of $0.61. Additionally, this other income increased diluted earnings per share for the twelve month period ended December 31, 2004 by $0.06.

In addition, during 2004, Rent-A-Center recorded $47.0 million in pre-tax charges in the third quarter associated with the settlement of the Griego/Carrillo litigation and $4.2 million in pre-tax charges associated with the refinancing of its senior credit facility. These charges reduced diluted earnings per share for the twelve month period ended December 31, 2004 by $0.40. These charges, combined with the $7.9 million in one-time other income in the fourth quarter, reduced diluted earnings per share for the twelve month period ended December 31, 2004 by $0.34 to the reported diluted earnings per share of $1.94.

Furthermore, during 2003, Rent-A-Center recorded $35.3 million in pre-tax charges associated with its recapitalization, $27.8 million in pre-tax charges in the second quarter of 2003 and $7.5 million in pre-tax charges in the third quarter of 2003. These charges reduced diluted earnings per share for the twelve month period ended December 31, 2003 by $0.25 to the reported diluted earnings per share of $2.08.

Rent-A-Center will host a conference call to discuss the fourth quarter and year end financial results on Tuesday morning, February 8, 2005, at 10:45 a.m. EST. A link to the live webcast will be available from My RTO Portfolio.

Rent-A-Center currently operates 2,871 company-owned stores nationwide and in Canada and Puerto Rico. ColorTyme, Inc., a wholly owned subsidiary of the Company, is a national franchiser of 307 stores.

FIRST QUARTER 2005 GUIDANCE:

Revenues

-- The Company expects total revenues to be in the range of $598 million to $606 million.

-- Store rental and fee revenues are expected to be between $516 million and $521 million.

-- Total store revenues are expected to be in the range of $586 million to $594 million.

-- Same store sales are expected to be in the (3.5%) to (4.5%) range.

-- The Company expects to open 10-15 new store locations.

Expenses

-- The Company expects cost of rental and fees to be between 21.6% and 22.0% of store rental and fee revenue and cost of goods merchandise sales to be between 60% and 70% of store merchandise sales.

-- Store salaries and other expenses are expected to be in the range of 56.5% to 58.0% of total store revenue.

-- General and administrative expenses are expected to be between 3.3% and 3.5% of total revenue.

-- Net interest expense is expected to be approximately $10.5 million and amortization of intangibles is expected to be approximately $2.3 million.

-- The effective tax rate is expected to be in the range of 37.5% to 38.0% of pre-tax income.

-- Diluted earnings per share are estimated to be in the range of $0.55 to $0.59.

-- Diluted shares outstanding are estimated to be between 76.0 million and 77.0 million.

FISCAL 2005 GUIDANCE:

Revenues

-- The Company expects total revenues to be in the range of $2.39 billion and $2.42 billion.

-- Store rental and fee revenues are expected to be between $2.145 billion and $2.170 billion.

-- Total store revenues are expected to be in the range of $2.345 billion and $2.370 billion.

-- Same store sales increases are expected to be in the flat to (2.0%) range.

-- The Company expects to open 70 - 80 new store locations.

Expenses

-- The Company expects cost of rental and fees to be between 21.6% and 22.0% of store rental and fee revenue and cost of goods merchandise sales to be between 65% and 75% of store merchandise sales.

-- Store salaries and other expenses are expected to be in the range of 56.5% to 58.0% of total store revenue.

-- General and administrative expenses are expected to be between 3.3% and 3.5% of total revenue.

-- Net interest expense is expected to be between $39.0 million and $44.0 million and amortization of intangibles is expected to be approximately $7.5 million.

-- The effective tax rate is expected to be in the range of 37.5% to 38.0% of pre-tax income.

-- Diluted earnings per share are estimated to be in the range of $2.30 to $2.40.

-- Diluted shares outstanding are estimated to be between 76.5 million and 77.5 million.